Office for Budget Responsibility's Role and Recent Developments in UK Economic Policy
The Office for Budget Responsibility (OBR) is a small department located within the Ministry of Justice building, playing a significant role in UK economic policy. It is led by chair Richard Hughes alongside Tom Josephs and David Miles, who together form the Budget Responsibility Committee. These members are appointed by the Chancellor with the consent of the Treasury Select Committee.
The OBR officially monitors government spending plans and releases economic forecasts twice annually, coinciding with the Budget and Spring Statement. Its assessments focus on whether the government is meeting its fiscal rules, providing independent analysis of economic data and projections.
In 2024, a new law passed by the Labour government enhanced the OBR's powers, allowing it to initiate forecasts without needing government requests. This change followed the 2022 mini-Budget and enables the OBR to challenge departmental spending assumptions and access Treasury data directly. Despite these strengthened powers, ministerial statements clarify that the OBR's authority is defined by Parliament, and decisions on policies and fiscal rules remain with the Chancellor and Parliament.
Critics have described the OBR as unelected and powerful, with some Labour and industry figures labeling it undemocratic or unaccountable in constraining economic growth. In October, the OBR downgraded the UK's productivity forecast by 0.3 percentage points. The Institute for Fiscal Studies (IFS) estimates this reduction could increase borrowing by approximately £21 billion in 2029-30.
Starting with the current Budget, the OBR will calculate fiscal headroom once annually rather than repeatedly, in line with International Monetary Fund (IMF) guidance advocating for higher headroom to prevent economic downturn cycles. However, market conditions continue to act as a constraint on policy decisions.
